Executive Remuneration at

Reckit Benckinser plc.

Ahmad Supriadi (29118322)
Arif Hadianto (29118393)
Farhan Soeprapto (29118351)
Haris Wiyono (29118372)
Sutami Sitorus (29118381)

Group 7
 History
Dec, 1999 The Merger
• Benckiser N.V., a Netherlands-based household product company in 1823
• Reckitt & Colman plc., a United Kingdom-based consumer product company which began in 1804

2001 Rank 11th

• Reckit Beckinser plc. was ranked 11th behind leaders Unilever and Procter & Gamble (P&G) in consumer package
goods

2002 The Growth

• Total Sales 3.5 Billion pounds with supported by 23 thousands employees with operations in 60 countries
• Sold products in 180 countries and had 50 manufacturing facilities across every continent

2003 The Leaders

• Reckit Beckinser plc was number one in the world in household cleaning products and ranked third in the
broader household goods category.

2003 Reflected The Culture

• Overall, the merger was a commercial and financial success.
• The new company reflected the culture of each of two combined companies, with 75% adapted from Benckinser
and 25% adapted from Reckitt& Colman
 Company Strategy & Performance

Rickett Beckinser plc Strategy & Performance

Leverage out net revenue

Grow by acquisition and
organic growth through line
extensions and new products.
Target new products to hold
the market-leading position
in 15 Power Brands
growth into even stronger
net income growth and
strong cash generation
through improving operating
margins and cash flow
management
 Renumeration Philosophy

Global Nature
• Pay executives in a such way that they would have complete global mobility
• Valued highly the fresh thingking and new ideas.
• Developed a plan to motivate and retain top managers while adhering to a
global remuneration policy

Fundamentals
• Base pay is sufficient to live on, if the employee performance is hits her/his
target to be getting better than the competition, then he/she may earn a
maximum bonus of 3 ½ times the target bonus
• The plan consisted of three major parts: salary, short-term incentives, and long-
term incentives. Salary and Short-term incentives were paid in cash. While Long-
term incentives were paid in options and restricted stock
 Compensation Decision Makers

• To formulate and maintain the remuneration policy

The Role of Human
• Engaged an external compensation consulting frim to provide market data and
Resources
commentary on market trends

• As the custodians of the compensation strategy

The Role of The • To ensure the policy was aligned with the company culture
Board of Directors • It served the business strategy and executives
• Any changes in compensation policy had to be approved by the entire board

• Company’s remuneration policy had to be blessed also by the company

shareholders
• Shareholders at Reckitt Benckinser voted on long term incentive schemes
Shareholder • Shareholder also had the right to vote on the amount of dilution allowed
Involvement under the plan
• In order to implement its incentives program and to stay even with the US
competition, Reckittt Benckinser need to obtain its shareholder approval to
raise this level to above the UK norm
Broader Issues on the Table

Problem:
The shareholder didnt want the company paying
executives large amount of compensation if their
action dont have a result

Other issue was the length

of contracts for senior
executives

There was a general Problem:

confusion about the The performance oriented compensation
system need high quality people with
valuation of stock options passionate commitment